The Australian dollar powered on but failed at the .77 cents level again overnight as the US dollar found support on the back of US Federal Reserve comments.
“At this stage, traders seem to be wary of taking the Aussie back into a zone where there have been consistent sellers over the past 6 weeks,” said Greg McKenna, Chief market strategist at FX and CFD provider AxiTrader in Sydney.
Who’s afraid of the Aussie Dollar at $0.77?
“The big question for Aussie dollar traders is ‘who is afraid of the .77 cents’. And the answer is everyone,”
“That’s because recently every time the Aussie has moved above that level it has been hammered back down. So with a mildly stronger US dollar overnight and pretty much all the good news priced into the Aussie traders aren’t prepared to take the Aussie higher just yet,” McKenna said.
He added, “Today’s Chinese and Australian trade data offer potential catalysts for another test of resistance but the chartists suggest the Aussie dollar will head lower.”
According to McKenna, “Last night’s high (for the Aussie dollar) around 0.7697 again reinforced that traders are wary of the supply zone above 77 cents where sellers have been consistently lurking during this time frame.
Chinese and Australian trade data could be next catalyst
After yesterday’s strong Australian GDP result showed growth accelerated to 3.3% year-on-year as Australia completed 25 full years without a recession, today’s Australian trade data for July is probably less important than otherwise might be the case.
“But any significant deviation from the markets expectations of a $2.75 billion deficit could see a reaction,” McKenna said.
He added that the Chinese trade data for August today will be likely to be more important for the markets and investors.
The market is guesstimating exports fell 4% and imports fell 4.9% but given the trouble in global shipping which last week saw the collapse of Korean giant Hanjin, and given the fact the International Monetary Fund (IMF) is saying this could be the weakest year of growth since 2009 the data takes on an elevated level of importance, McKenna noted.
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